Mesa Laboratories enters five-year revolving, term loan agreement

By Tali Rackner

Norfolk, Va., March 2 – Mesa Laboratories, Inc. entered into a five-year agreement on Wednesday for an $80 million revolving line of credit, a $20 million term loan and up to $2.5 million of letters of credit, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA is the administrative agent, bookrunner and lead arranger on the deal.

The facility includes an accordion option that allows the company to increase the line of credit or term loan by up to an additional $100 million.

Interest on the line of credit and term loan is equal to Libor plus 200 basis points, and ranges from 150 bps to 250 bps, based on Mesa’s leverage ratio. Letter-of-credit fees are based on the applicable Libor rate.

The unused fee is 25 bps and can range from 15 bps to 35 bps, also depending on leverage.

The credit agreement matures on March 1, 2022.

The term loan requires 20 quarterly principal payments (the first due date being March 31) in the amount of $250,000 (increasing by $125,000 each year up to $750,000 in the fifth year). The remaining balance of principal and interest are due on March 1, 2022.

The credit facility is secured by all of the company’s assets and requires it to maintain a maximum ratio of funded debt to trailing four quarters of EBIDTA of 3 times. However, Mesa may, once during the term of the facility, in connection with a permitted acquisition when the aggregate consideration paid or to be paid in respect thereof equals or exceeds $20 million, elect to increase the maximum leverage ratio to: (a) 3.5 times for a period of four consecutive fiscal quarters beginning with the fiscal quarter in which the acquisition occurs; and (b) 3.25 times for the next four consecutive fiscal quarters.

Mesa must also maintain a minimum fixed-charge coverage ratio of 1.25 times.

In connection with the new credit facility, on March 1, the company repaid in full, all obligations and liabilities owing under, and terminated its existing $70 million credit facility with JPMorgan. The payment included $50.25 million of outstanding debt.

Mesa Laboratories is a Lakewood, Colo.-based designer, manufacturer and marketer of quality control instruments and disposable products.

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